Livestock Futures Fall on Tepid Demand

12/07/2017 | 09:28 pm

By Benjamin Parkin

Lower beef and physical cattle prices continued to weigh down the futures market.

Cattle futures have mostly fallen since last Thursday as traders reacted to soft demand by unwinding optimistic bets. Hedge funds in particular are liquidating their long positions in live cattle futures, analysts said, and others have reacted to trading patterns that suggested prices were trending lower.

Supply-and-demand factors have also contributed to the selling. Wholesale beef prices fell $1.24 to $205.16 per 100 pounds on midday Thursday, extending losses from a day earlier. Large supplies of red meat have kept prices low.

Weekly export sales of beef reported by the U.S. Department of Agriculture were underwhelming, analysts said, falling from a week earlier.

"Beef demand has peaked with buyers turning slow and cautious and adapting a hand-to-mouth purchasing mentality," said Dennis Smith, a broker at Archer Financial Services. "What is amazing is the amount of total meat being pushed into the pipeline at this time."

December-dated live cattle futures fell 0.2% to $1.15625 a pound at the Chicago Mercantile Exchange, approaching a six-week low, while later months also fell. Futures for feeder cattle rose.

Prices have fallen in the physical cattle trade this week. Meatpackers paid feedlots $117 per 100 pounds on a live basis in southern states on Thursday, following up from live sales of $117 to $118 and dressed sales of $187 dressed further north Wednesday. Those prices were mostly $3 to $4 lower than a week earlier.

Signs of pork demand were strong, with wholesale pork prices higher on Thursday. Export sales of hogs rose in the week ended Nov. 30 to 30,100 metric tons for 2017 and 2018 combined, higher than a week earlier and the four-week average.

Cash prices, however, were expected to extend recent losses as large supplies of fattened hogs gave packers more bargaining power.